Veritas: Faltering start for Carmignac’s UK campaign

By: Madison Marriage | 11 Oct 2011

Despite announcing plans to expand into the UK market in January 2011, French asset manager Carmignac Gestion has only recently hired Matthew Wright as head of country UK and announced the potential opening of its UK office in November 2011.

According to Wright (pictured), charged with developing relations with financial distributors and wealth managers in the UK, “the timing is perfect for [Carmignac’s] commitment to the UK.”

Yet the timing was also considered perfect at the beginning of the year. At Carmignac’s annual meeting with investors and advisors in January 2011, the company announced the time was ripe to tackle the UK having established the company in its home market of France.

“We feel mature enough to venture into this market now,” general manager Eric Helderlé said at the time. “It has a strong equity philosophy we feel at ease with, and distribution is geared to independent financial advisors.”

The company also registered a GBP share class with distributor status for 10 Carmignac Gestion funds in January 2011 enabling UK investors to access several of the company’s diversified funds.

The group’s determination to confront the UK market seems to have stalled or run into difficulty. It has taken nine months to hire Wright to front its UK campaign and the company remains unclear about the opening of its UK office.

A recently issued company statement said that Wright will be leading and building up Carmignac’s sales team for the UK “with a view to” opening Carmignac’s permanent office in the City of London in November 2011. The exact date and location of the office remain unknown.

Despite Helderlé’s upbeat tone about the UK expansion in the statement (“UK investors are increasingly appreciating the value of investing globally” and the UK is “such a key market”), the company is reluctant to explain why its UK efforts have been delayed.

Representatives in both the UK and France said the Carmignac Gestion team could not be contacted for comment on the tardy UK office launch and marketing campaign.

Tant pis for Carmignac: its refusal to explain its muddled entry into the UK market indicates staffing, regulatory or financial difficulties or perhaps worse – a combination of the three.

The problematic months the company experienced between January and July 2011 may explain why the UK efforts have faltered. Just as it announced plans to take on the UK, doubts were raised about Carmignac’s investment strategy and fund performance.

According to Didier Saint-Georges, member of Carmignac’s investment committee, at the start of 2011 many criticised Carmignac’s flagship Carmignac Patrimoine A fund for its “below par” performance.

The fund produced negative returns in five of the first six months of the year bringing year to date performance to negative 4.6% at the end of June.

The fund’s fortunes began to turn around by summer when Carmignac Patrimoine A was up 1.63% in July and 1.12% in August attracting international media attention and praise – “From zeroes to heroes at Carmignac Gestion” one headline declared.

Perhaps Carmignac Gestion has been playing a waiting game, deliberately delaying the UK marketing push until its funds’ performances were back on track and its doubts about the health of the Eurozone proven correct.

The group has also been busy setting up its emerging markets focused Carmignac Emerging Patrimoine fund and its launch was announced amid much fanfare in September 2011.

However, these facts alone do not explain Carmignac Gestion’s slow struggle to infiltrate the UK market.

The company has already expanded into Luxembourg (1999), Italy (2002), Switzerland (2003), Germany (2004), Spain (2005), Netherlands (2006), Austria (2009) and both Sweden and Singapore (2010) and is clearly capable of targeting a new region in a relatively short time frame whatever the market conditions.

Whether the UK office actually materialises in November 2011 remains to be seen.